Michigan Consumer Sentiment: December Preliminary Unchanged

The University of Michigan Preliminary Consumer Sentiment for December came in at 97.5, unchanged from the November Final reading. Investing.com had forecast 97.1.

Surveys of Consumers chief economist, Richard Curtin, makes the following comments:

Consumer sentiment was unchanged from last month's reading and has remained at very favorable levels since the start of 2017. In the two years from January 2017 to December 2018, the Sentiment Index was consistently above 90.0, averaging 97.5, identical to the early December reading. The last time the Sentiment Index was consistently above 90.0 for at least as long was from 1997 to 2000, recording a four-year average of 105.3. There are a number of plausible causes for the difference in consumer optimism from the late 1990's to today, most of which revolve around job and wage prospects. As noted in last month's report, as long as job and income growth remain strong, rising prices and interest rates will not cause substantial cutbacks in spending. In the early December survey, however, consumers did mention hearing much more negative news about future job prospects. The chart above shows the close relationship between recent changes in per capita durable spending and trends in unemployment expectations. Moreover, most consumers understand that the goal of increasing interest rates is to slow the pace of economic growth. In past expansions, there was plenty of room between low and high interest rates to nudge up rates without damaging consumer spending. The gap has been squeezed to just a few percentage points and more caution is now warranted. [More...]

See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

(Click on image to enlarge)

Michigan Consumer Sentiment

To put today's report into the larger historical context since its beginning in 1978, consumer sentiment is 13.3 percent above the average reading (arithmetic mean) and 14.6 percent above the geometric mean. The current index level is at the 86th percentile of the 492 monthly data points in this series.

1 2
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.